Bitcoin's Impact on Banks

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CHALLENGE DESCRIPTION

UPDATE: (10/21/2014): This challenge is now complete. 35 experts contributed and a team of 4 finalized the study. A summary of the results and the full report are available by contacting Yegii directly. Additionally, a set of relevant knowledge assets are freely available to browse, see Bitcoin knowledge assets.

i) Explain how bitcoin and other cryptocurrencies work.
ii) Synthesize what benefits they bring and what challenges they impose.
iii) Analyze what is the impact for banks as we know them today: what are the threats and what are the opportunities, both for commercial banks and for investment banks / trading houses.
iv) Craft a practical recommended course of action short and mid term for banks based on the analysis above - both in terms of individual actions to compete for opportunities against other banks, and in terms of collective / sectorial actions to defend and compete against non-banking players, thus lying the foundations for "co-opetition" (i.e. collaboration to compete).